From what I could glean online, the differences are mainly the form factor (where the pipes attach, etc) and the all-important magical sticker. I'm guessing the additional expense is mostly to cover the magical sticker and the testing/approvals needed to be allowed to put It on the heater.
The HUD approval is only required by law, at the national level, for initial sale. State or local laws, or insurance company requirements, might well preclude the use of a non-HUD-approved electric water heater none the less.
